Rice University
Report of the President
1983
Rice University
Report of the President
1983
A TRIBUTE TO THE MEMORY OF
GEORGE R. BROWN
1898-1983
FROM HIS ASSOCIATES AT RICE UNIVERSITY
The Rice Board ot Governors is deeply saddened by the loss of George R. Brown, valuable counselor and
friend, and extends its sympathy to Alice Brown and the Brown family.
For four decades Mr. Brown as Board member and as interested partisan of Rice University challenged
the Board, the administration, the faculty, and the students to find ways of making a better university. Each
challenge emerged with the spirit ot adventure which typified his work and with which he infused all of his
projects.
Through his generous bequest, William Marsh Rice founded an institute tor the advancement of
literature, science and art, for the instruction of the inhabitants ot Houston and Texas. George Brown
provided goals and opportunities for the institute to become a university of national and international
impact while continuing to maintain the careful conversion of talented students into eftective members of
society.
Mr. Brown influenced the development ot the University in many ways, some of them, because of his
own wishes, known only to a few. He should be highly honored for his role in any of the following, since he
was instrumental in the success of all: the Rincon oil field purchase; the additions of buildings including the
Fondren Library, Anderson Hall, Abercrombie Engineering Laboratory, Herman Brown Hall, and the
Space Science Laboratory; the football stadium; the revision ot a conservative investment policy; the $33
Million Capital Campaign; the revitalization ot the engineering school; the establishment ot three
residential colleges; the George R. Brown Prizes tor Excellence in Teaching; and the Brown Challenge
Grants.
No one has had a greater influence on the de\'elopment ot this University than George R. Brown. His
ideas and generosity will continue to enrich the li\'es of the students, taculty, and triends, as long as there is
a Rice University.
NOW, THEREFORE, BE IT RESOLVED that this resolution be recorded on our minutes and copies
hereof, properly inscribed and sealed, he delivered to his widow, Alice Pratt Brown, and the family: Nancy
Brown Negley, Maconda Brown O'Connor, Isabel Brown Wilson, Louisa Stude Sarotim, and M. S. Stude.
Norman Hackerman
President
Charles W. Duncan, jr.
Chairman
Josephine E. Ahercromhie
John L. Cox
C. M. Hudspeth
Edward W. Kelley, Jr.
Ralph S. O'Connor
Jack T. Trotter
Judy Ley Allen
J. Evans Attwell
James A. Elkins, III
Catherine C Hannah
PaulN. Howell
William F. Kieschnick
S. I. Morris
David L. Rooke
David E. Famsworth
William M. McCardell
Taylor Ray
Rice University Houston, Texas March 24, 1983
Digitized b]rin^ Internet Archive
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http://www.archive.org/details/reportofpres19821983rice
FROM THE PRESIDENT
January 13, 1943, George Brtnvn was named trustee ot Rice Institute. He served as
trustee and trustee-emeritus until his death on January 22, 1983. Thri)ughout these
forty years he gave generously of his time and his talents tor the betterment of
Rice. In reviewing his service to Rice, three things stand out in my mmd:
1. While Mr. Brown was chairman ot the board, Rice Institute, a predomi-
nantly undergraduate school, changed to Rice University with graduate
and protessional schools, the college system, and greatly expanded educa-
tional, athletic and residential facilities. The goal, as defined by the
Board and aftirmed by the court, was to be a "University ot the hrst class."
2. George Brown was deeply concerned with teaching — good teaching. He
established an endowment to give annual awards and recognition to good
teachers. Today the quality of instruction is one ot the distinguishing
characteristics of Rice.
3. George Brown led the first tunding effort for Rice Institute in order to pur-
chase the Rincon oil tield. Under his direction a de\'elopment office was
established in 1953. In 1965 he served as chairman ot the first capital
campaign. In 1976 he announced the "Brown Challenge" as a long term
incentive-funding effort for Rice. During his years of service, gitts trom
more than 21,500 alumni, corporations, foundations, and triends were
received by the University — representing a current value ot more than
$300 million m plant, endowment, and operating funds.
Rice today bears the strong imprint ot George R. Brown. So will the Rice ot
tomorrow.
Nbmian Hackemian
President
"At m\ death, jar value reeeived, I promne to pay. . . jor the 'WiUiam M. Rice Institute jur the advaiieement
of Literature, Science and Art the sum oj Two Hundred Thousand Dollars. . . That the above sum of Two
Hundred Thousand Dollars is an Endowment. .."
W.M. Rice
Houston, Texas, May 13, 1891
THE ENDOWMENT
At its opening in September 1912, Rice offered high quality instruction in "letters,
science and art" to a select group of students, at no tuition. This was possible only
because of Rice's endowment, then the largest in the South. Today, due to the
generosity of alumni and friends and the careful management of its resources. Rice
University has an endowment that continues to rank among the ten latgest college
and university endowments in the United States. The income from this endow-
ment pays for approximately sixty percent ot the instructional costs for each stu-
dent. The establishment, maintenance, and growth of this endowment represents
one of the great stories of American philanthropy in education.
The endowment of Rice University was established by William Marsh Rice in
1891 with a $200,000 note yielding two and one-halt percent per year payable to
the Rice Institute upon his death. Mr. Rice subsequently added to the original en-
dowment by deeding several parcels of real estate to the Institute with the stipula-
tion that the deeds would not be published until attet his death: Forty-nine
thousand acres ot pine timber lands in western Louisiana, the Capitol Hotel built
on the site of the Republic of Texas' 1837 capitol in Houston, and six and one-half
acres on Louisiana Street designated as the site for the Rice Institute. Combined
with other real estate and notes assigned to the Institute during Mr. Rice's lifetime,
these original endowment gifts totaled $3,319,755.
Aftet Mr. Rice's estate was settled in 1904, apptoximately $3 million was dis-
tributed to the Institute and added to the endowment as a separate capital fund. By
the time of the formal opening of the Rice Institute m 1912, the endowment had
grown to almost $9 million. The majority of the increase was a $1,787,439 addi-
tion to the original endowment account from the Rice Land Lumber Company,
which was formed to manage the 49,000 acres in Louisiana.
For the next 25 years there was little activity in the new company and bv the
late 1930s, it owed the Institute almost $150,000 as a result ot property taxes and
other expenses exceeding the revenues that it produced. That pattern was soon to
be reversed, however. From the 1940s through the ptesent, the main source ot
income for Rice Land Lumber Company has been oil and gas revenues, including
royalties, lease rentals, and lease bonuses. As ot June 30, 1983, oil and gas reve-
nues since 1943 amounted to about $18 million and gross timber sales were approx-
imately $6 million. More than $21 million has been added to the university's
endowment ttom Rice Land Lumber Company disttibutions.
The 1940s were also the beginning of another major source of oil and gas rev-
enue for Rice University. In 1942, at the urging of County Judge Roy Hofhein: '32
and George R. Brown '20, Rice's trustees wete persuaded to take advantage of a
unique opportunity to purchase nearly fifty percent interest in a proven oilfield,
In the original endowment were 49, 000 acres of timber lands in Loiasidna. most of which are still
owned by the university. More than $21 million has been added in the unwersny's endowment from
oil and gas and timber revenues received from these properties.
Tfit' capitol grounds of the Republic of Tcxai were pdii nj Kill's uri^^indl endoument Founder William jMursh Rict' acquired the property after the depicted
capital bmldmg (1836-40) icas razed to make ivay for the old Capitol Hotel and also the Rice Hotel, each nj ivhich were owned by the university at various
intervals. (Photo^aph courtes^' of Houston Public Library. Metropolitan Research Center)
SOUTH.
, TEXAS" ■
CannERCiAL.
NATIONAL
. BANK'
1//^^
IDA?.
^Af/f ry/'..lxKR-x NiTiftJUii. BitjK A, Trust Co.,
^ ■ UK LA H Of,^ A. C I T Y , OK L A .
\/ai/ ^f'^ni:
CASHIER'S CHECK
Aboi'e, tlie signing ceremony making Rice's pur-
chase of interest m the Rincon Oil Field. December
18. 1942. Suinding. left Ui right: A.S. Cleveland,
Tom Davis. C.A. Dwyer. Palmer Hutcheson,
John Freeman, James A. Ellcins, Count-v Jiaige
Ro>' Ho/hem:, A. H. Fulbnight, John Q.
Weatherly, Harry Hansjen. Seated: James L.
Shepherd. Jr. , Benjamin Botts Rice, John T. Scott
... At left, the $ I -million check that paid for
Rice's Rincon interest and helped launch the en-
dowment's remarkable growth of the past forty
years.
THE ENDOWMENT
The Rincon Oil Field near the Mexican border has generated almost $45 mdhon oj net incumL',
$39,200,000 of which has been added [» the unreitricted L'ndoirmL'nt-
the Rincon field in Starr County, Texas. In one ot its tirst major solicitations ot
donors, Rice raised $500,000 toward the Rincon purchase. Demtmstrating their
confidence in the wisdom ot the acquisition ot the Rincon field, the followin.y
community leaders contrihuted the tirst $200,000: Mr. and Mrs. Herman Brown,
Mr. and Mrs. George Brown, Mr. and Mrs. Harry Wiess, Mr. and Mrs. Stephen
Parish, Mr. and Mrs. Will Parish, and Mr. and Mrs. Hugh Roy Cullen. The M. D.
Anderson Poundation contrihuted $300,000 toward the purchase, and the balance
of $500,000 ot the down payment was taken from Rice endowment funds.
The assumed debt from the Rincon purchase was retired by July 1947 using
net revenues generated by the field, and the net income from the properties, less
recovery of the asset cost, began to be added to the endowment fund. Pftective July
1, 1972, the Board of Trustees changed the policy with respect to oil and gas re-
ceipts (except those from properties of the original endowment) and authorized
transferring 72.5 percent to current operations and retaining 27.5 percent in the
endowment fund after the related asset was fully amortized. As ot June 30, 19b3,
the Rincon properties had generated almost $45 million of net income, of which
$39.2 million had been added to the unrestricted endowment and $5. 5 million had
been spent for current operations since 1972.
The assets derived from Mr. Rice's gifts, other unrestricted endowment gifts,
and designated portions of oil and gas revenues, constitute the unrestricted endow-
ment of Rice University. Llnder terms of the will, the corpus ot these funds cannot
be spent and the income produced by these funds is unrestricted and for the general
operation of the University.
Many gifts to the University are restricted by the donor to establish an end(.)w-
ment that will provide income for a particular purpose. Such endowments fund
specific scht)larships, fellowships, professorships, instructional programs, and other
University activities. Examples include the Graham Baker Scholarship, the Class
of 1929 Scholarship, the Lynette S. Autrey Professorships, the Harry C. and Olga
Keith Wiess Science and Engineering Fund, and the Shepherd Music School En-
dowment. As of June 30, 1983, there were 337 restricted and other designated
endowment funds at Rice having a total market value of approximately $167. 3
million. The corpus of the restricted funds canniit be spent, and the income must
be used in accordance with the conditions ot the gifts.
The annual revenue of the unrestricted current fund that is not spent or allo-
cated to a specific use, plus certain other transfers approved by the Board of Gover-
nors, constitute Punds Functioning as Endowment (PPAE). The June 30, 1983
book value of PPAE is $89.4 million. The corpus of PPAE may be spent upon ap-
proval of the Board; the income is unrestricted and used for the general operation
of the University.
THE ENDOWMENT
These three funds — the Unrestricted Endowment, the Restricted Endow-
ment, and Funds Functioning as Endowment — make up the endowment ot Rice
University. When the stocks, honds, and other assets are valued using the June 30,
1983, market values, the endowment fund is in excess of $500 million. This en-
dowment produced income, not including realized capital gains which are added to
the endowment, of more than $32,750,000 for the year 1982-1983.
PRIVATE UNIVERSITY ENDOWMENTS
1982 1973 1963 1953
Endowments
by Rank
1 . Harvard
2. Princeton
3. Columbia
4. Stanford
5. Yale
6. M.l.T
7. Rochester
8. Chicago
9. Northwestern
10. Rice
11. Cornell
12. Washington U.
13. N.Y.U.
14. Emory
15. Johns Hopkins
16. Dartmouth
17. Pennsylvania
18. CalTech
19. Notre Dame
1943 1933 1923 1913
$1,711 $1,189
20.
21.
22.
23.
24.
S. California
Vanderbilt
Duke
Case-Western
Brown
25. Carnegie- Mellon
886
777
770
747
630
424
394
365
345
318
311
310
296
262
260
218
209
204
186
185
159
140
127
124
433
255
350
517
437
494
293
279
177
300
161
138
227
159
171
151
141
76
58
168
113
77
105
125
5416
88
146
129
282
125
84
155
99
102
124
58
56
38
94
72
81
55
27
12
55
46
82
36
52
$216
55
111
44
147
41
60
75
70
44
50
35
21
23
42
30
36
28
8
2
32
20
31
15
30
il54
35
89
31
106
37
52
71
25
17
33
18
9
7
30
20
22
13
na
na
27
39
17
11
17
5126
20
89
27
92
33
53
59
17
13
na
20
9
5
31
17
19
8
na
na
20
24
18
10
16
53
13
41
27
36
17
13
32
5
12
20
12
3
2
22
7
10
6
1
1
7
na
7
7
10
27
5
9
24
15
3
na
18
4
10
10
7
1
na
6
4
1
na
na
na
3
na
5
na
7
note; All ot the above sums are rounded off to the nearest million dollars. The
figures for 1982 and 1973 are taken from the 1981-82 and 1972-73 editions of
Voluntary Support of Education, prepared annually by the Council for Financial
Aid to Education. The figures for 1963, 1953, 1943, 1933, 1923, and 1913 are
from the appropriate annual issues of the World-Telegram World Almanac for
schools other than Rice.
At the completion oj its first academic/fiscal year in 1913, Rice estimated /or the editors of the 1914
World-Telegram World Almanac that its endowment (or "productive funds") stood at $10 mil-
lion. At the time, this was exceeded only by Harvard, Stanford, Chicago, and Yale endowments (in
that order) and produced $482,000 income with which to run the nation's newest institution of
higher learning. In the years since, as noted m the text, tfie Rice eiuiowment has increased steadily
following a change of investment policies in the 1 940s and the generosity of the university's alumni,
friends, foundation, and the business community.
THE J 982-83 ACADEMIC YEAR
Matriculation ot a record 685 freshmen in August 1982 pushed the enrollment of
full-time undergraduates to 2,707 and total enrollment to 3,746. Quality did not
suffer with the increased numbers, which included 172 new National Merit
Scholars. Rice's 554 merit scholars in all tour classes was third highest in the
nation behind Harvard/Radclitfe and Princeton. Average SAT scores among
incoming freshmen was 1,294-
Construction on campus was continuous, with completion of the Seeley G.
Mudd Computer Science Building and initiation ot work on Herring Hall for the
Jesse H. Jones Graduate School ot Administration.
It was the year ot the British at Rice with visiting lecturers trom England in-
cluding Prince Phillip to discuss the World Wildlite Fund, Speaker ot Britain's
House ot Commons George Thomas, distinguished playwright Tom Stoppard,
former London Times editor and current chaitman of England's Arts Council Sir
William Rees-Mogg, and former British prime ministet Edward Heath.
Death claimed several long-time members ot the Rice community during the
year in addition to former board chairman George Brown. These include former
trustee John S. Ivy (1951-68), former governor F. Fisher Reynolds (1969-73), Jess
Neely (football coach and athletic director, 1940-67), William H. Masterson (first
dean of humanities and first mastet ot Hansren), Michael V. McEnany (totmer
registrar, 1954-64, and first dean of undergraduate affairs, 1964-73, after hrst com-
ing to Rice to instruct in electiical engineering in 1943), and William W. Caudill,
a distinguished architect who was director of the univetsity's school of architecture
from 1961 to 1969. They all deserve to be remembered by the Rice communitv.
As academic/fiscal 1982-83 approached its end. the Seeley G. MiuM Computer Science Budding
was virtualh complete.
11
STUDENT STATISTICS FOR 1982-83
Enrollment (tall 1982)
Undergraduate
Humanities/Social Sc
ences
Architecture
Engineering
Music
Science
Dciuhle, Triple, Area
Vlajors
Graduate
Humanities/Scicial Sc
lences
Administration/Accounting
Architecture
Engineering
Music
Science
Geographic Distrihution
(fall 1982)
States
Students
Alahama
25
Alaska
7
Arizona
14
Arkansas
28
California
102
Colorado
38
Connecticut
42
Delaware
12
District of Columhia
18
Fkirida
84
Georgia
37
Hawaii
6
Idaho
4
Illinois
90
Indiana
29
k)wa
9
Kansas
32
Kentucky
19
Louisiana
93
Maine
8
Maryland
51
Massachusetts
60
Michigan
32
Minnesota
15
Mississippi
17
Missouri
76
Montana
7
Nebraska
10
Nevada
9
New Hampshire
9
New Jersey
58
New Mexico
48
New York
121
North Carolina
10
North Dakota
1
Ohio
77
Male
Female
Total
2,349
1,397
3,746
1,669
1,038
2,707
363
359
722
78
47
125
561
190
751
33
45
78
363
210
573
271
187
458
680
359
1,039
129
154
283
50
41
91
47
24
71
205
27
232
23
27
50
226
86
312
States
Students
Oklahoma
99
Oregon
10
Pennsylvania
64
Rhode Island
3
South Carolina
12
South Dakota
7
Tennessee
41
Texas
1,769
Utah
5
Vermont
2
Virginia
55
Washington
20
West Virginia
9
Wisconsin
23
Wvoming
3
Guam
Puerto Rico
5
Virgin Islands
1
Foreign*
China
England
France
Germany
India
Iran
Japan
Korea
Mexico
Taiwan
Venezuela
Students
16
12
9
16
31
8
13
13
21
33
*61 countries from which tuir current
students number seven or less are not
listed.
12
COMMENCEMENT 1983
DEGREES AWARDED (MAV 10, 1983)
Bachelor ot Arts
Bachelor of Science in Chemical Engineering
Bachelor of Science in Ci\il Engineering
Bachelor tit Science in Electrical Engineering
Bachelor of Science in Materials Science
Bachelor ot Science in Mechanical Engineering
Bachelor of Fine Arts
Bachelor of Architecture
Bachelor ot Music
Master's Degrees
Doctoral Degrees
Totals
Male
Female
Total
251
195
446
26
11
37
12
5
17
61
14
75
3
2
5
22
6
28
1
1
11
3
14
2
6
8
139
84
22 3
46
25
71
573
i:>l
925
13
AUDITORS' REPORT
TO THE BOARD OF GOVERNORS.
WILLIAM MARSH RICE UNIVERSITY:
We have examined the balance sheet of William Marsh Rice University
(a nonprofit Texas corporation) as ot June 30, 1983, and the related statements of
changes in fund balances and current funds revenues, expenditures and other
changes for the year then ended. Our examination was made in accordance with
generally accepted auditing standards and, accordingly, included such tests ot the
accounting records and such other auditing procedures as we considered necessary
in the circumstances.
In our opinion, the accompanying financial statements present fairly the finan-
cial position ot William Marsh Rice University as of June 30, 1983, and the
changes in fund balances and the current funds revenues, expenditures and other
changes for the year then ended, in conformity with generally accepted accounting
principles applied on a consistent basis.
ARTHUR ANDERSEN & CO.
Houston, Texas
September 30, 1983
14
BALANCE SHEET
]L\'E30. 1983. WITH COMPAHATIVE TOTALS AT ]U\'E 30. 1982
DOLLARS /.\' THOUSAVDS
June^C. I9S3
ASSETS
Cash, Receivables and Other Assets:
Cash
Accounts receivable
Loans, net of allowance for doubtful accounts of
S484in 1983andS4S6in 1982
Other assets
Investments (Note 3):
Marketable securities, quoted market of 5488,843
in 1983 and 5333,487 in 1982
Developed real estate, less accumulated amortiration
of 55,770 in 1983 and 55,607 m 1982
Undeveloped real estate
Mortgage and collateral loans
^XTiollv owned corporations, at underlving
equit\- (Note 4)
Oil and gas properties, less accumulated amortization
of 529. 102 in 1983 and 1982
Interest-bearing endowment hind advances (Note SI
Interfund Receivable (Pavahle), noninteresi-bearing
Educational Plant, at cost:
Land
Buildings and improvements
Equipment, furniture and libran- books
Construction in progress
Less — Allowance tor amortization on auxiliarv and
educational service facilities
Total assets
LIABILITIES .AND FLTND BALANCES
Liabilities:
Accounts payable
Deferred income and deposits
Deposits of collateral for securities loaned (Note 5)
Retirement funds (Note 6)
Other accrued liabilities
Total liabilities
Commitments and Contingencies (Note 9)
Fund Balances:
U.S. Government and private grants refundable
Universit\- funds —
Unrestricted
Internally designated
Restricted
Income unrestricted endowment
Income restricted endowment
Unrestricted funds functioning as endowment
Restricted funds functioning as endowment
Unexpended plant funds
Net investment in plant
Total fund balances
Total liabilities and fund balances
Funis Similar Funds
5 500 5 —
582 2.7
604
301
(2291
13.456
(158)
288
1,686 3,065
320.911
3.371
5.040
3.971
1.242
3
16.50S
351.046
lis. 3261
—
—
515, ;;4
5i
^^.7S5
5 2.926
5
6.644
718
56
—
5.907
—
654
—
-
2SS
3.644
1x54-5
Plant Funds Lcian Funds
(10.626 )
(10.626 )
3.9S4
341
80,503
34,908
1,825
117.577
6
^43
110
734
5 1 04
092
4,305
—
—
1,978
—
—
5,445
—
—
—
141,764
—
—
71,854
—
—
89,405
—
—
19,213
—
—
—
3,984
—
—
100.1 OS
11,570
322,236
104.092
515,214
5335,755
5104.092
8.512
(5.653)
(5.636)
SS6
3.7t^4
2,849
913
3.762
3.764
Total
321,229
117.57;
6.543
2.691
]une3C. I9S2.
Toud
S 500
5
391
3,359
3,745
8,512
7,530
894
7S4
13,265
12.450
267,796
3,371
4,702
5,040
5,677
3,971
2,089
1,242
1,118
3
3
—
—
334,856
251,355
—
—
341
341
80,503
74,699
34,908
32,451
1.S25
638
105.129
5.401
110.734
102,728
545S.S55
5396,563
5 9.572
S 6.750
774
854
5,907
1.894
654
803
288
314
17.195
10,615
3.503
4,305
4,305
1,978
983
6,358
5.912
141,764
118,766
71,854
66,715
89,405
77,205
19,213
16,683
3,984
697
100,108
91,179
441,660
3S5.94S
S45S.855
5396,563
See notes to financial statements.
15
STATEMENT OF CHANGES /N EL/ND BALANCES
FOR THE YEAR ENDED JUNE 30, 1983
DOLLARS IN THOUSANDS
Current FuikLs
hucrnalh
L'TiR'sInctc'J Desi^ititL'ci
Revenues and Other Additions:
Unrestricted current tund revenues
Revenues and other additions oi
other funds —
Grants and contracts
Gifts and bequests
Receipts from investments —
Restricted income
Realued gains
Oil and gas royalties
Distributions from wholly owned
corporations (Note 4)
Distribution of income from assets
held by Rice Trust Inc.
Additions to investment in plant —
Direct expenditures (including
$2,718 charged to current
funds expenditures)
Repayment of advances from
endowment funds
Interest on loans receivable
Othet
Total revenues and cither additions
Expenditures and Other Deductions:
Educational and general
expenditures
Auxiliary enterprise expenditures
Indirect costs recovered
Refunded to grantors
Expended for plant facilities
Repayment of advances from
endowment funds
Interest on endowment fund
advances
Amortization of auxiliary and
educational service facilities
Retirement of plant assets
Loan cancellations and
collection costs
Total expenditures and other
deductions
Transfers among Funds — Additions
(Deductions):
Mandatory —
Undesignated gifts (Note 2)
Provision for plant improvements
(Note 7)
Funding of unrestricted current
expenditures for equipment
Funding of principal and interest
payments for plant additions
Other voluntary transfers, net
Total transfers
Net Increase (Decrease) for
the Year
Fund Balance at Beginning of Year
Fund Balance at End of Year
See notes to financial statements.
$56,842
$2,709
56,842
48,701
2,709
2,495
Endou'ment and
SimiLir Funds
PUint Funds
FwKUnnmg /Tuestmcnc
Rc'striclcd Endiiicment as End(JU'men[ Uncvpcnded m PLmt Loan Funds
3,885
7,208
—
6,503
5,940
__
1,887
128
—
14,774
9,678
—
—
2,583
—
—
134
197
(118)
22,918 27,915
38,240
2,319
19,645
10,461
176
454
—
—
2.770
—
3
1,123 4,804
— 1,441
V
— 753
22,872
,123
6,998
454
8,645
1,441
11,565 6,765 10,540
1,441
162
1,603
137
64
598
799
531
540
(41)
—
—
41
—
—
—
—
(2,707)
—
—
—
2,707
—
—
—
1,464
—
—
(1,464)
—
—
—
(2,194)
2,194
—
—
(4,663)
781
781
995
(671)
(671)
(625)
181
222
28,137
3,045
4,288
14,730
1,326
3,520
3.287
(8)
(8)
8.929
—
(8,141)
—
259
4,305
983
5,912
185,481
93,888
697
91,179
3,503
$ 4,305
$1,978
$ 5,287
$213,618
$108,618
$3,984
$100,108
$3,762
16
STATEMENT OF CURRENT FUNDS REVENUES,
EXPENDITURES AND OTHER CHANGES
FOR THE YEAR ENDED JUNE 30. 1983,
WITH COMPARATIVE TOTALS FOR 1982
DOLLARS IN THOUSANDS
Revenues:
Educational and general —
Endowment income (Note 3)
Student tuition and fees
Government grants and cimtracts
Gifts and private grants
Sales and services ot educational and service departments
Other sources
Total educational and general
Auxiliar\' enterprises
Total revenues
Expenditures and Mandatory Transfers:
Educational and general —
Instruction and departmental research
Sponsored research
Other sponsored programs
Library
Student aid
Student services
Operation and maintenance of plant
General administration
General institutional
Educational and general expenditures
Auxiliarv" enterprise expenditures
Total expenditures
Mandator^' transfers —
Undesignated gifts
Provision for plant improvements (Note 7)
Total expenditures and mandaron' transfers
Revenues over Expenditures and Mandatory Transfers
Other Transfers and Additions (Deductions):
Amount of restricted receipts (.iver transfers to re\'enues
Funding of unrestricted current expenditures for equipment
Funding of principal and interest payments for plant additions
Refunded to grantors
Other voluntary transfers, net
Net other transfers and .idditions (deductions)
Net increase (decrease) in fund balances
tear cndea^imt
11.', ivni
Year Etukd
Intcrnalh
j.me30, 1982,
UuTe^trwtcd
Dcsiiniatcil
Rcsmctcd
T)lal
Tnld
$26,828
$ —
$ 5,940
S32,768
$28,332
12,086
1,449
—
13,535
11,451
2,111
—
7,084
9,195
8,505
3,223
—
6,438
9,661
7,627
1,413
895
169
2,477
2,665
162
61
14
237
213
45,823
11,019
56,842
16,260
2,405
304
2,709
1,862
2,676
330
4,945
—
1,754
76
6,933
—
3,717
15
1,955
36
38,240
2,319
10,461
176
48,701
2,495
41
_
2,707
—
51,449
2,4*^5
5,3^3
214
1,464
—
(2,194)
—
(4,663)
781
(5,393)
781
$ —
$ 995
19,(545
454
20,099
20,09^
20,099
67,873
11,777
79,650
19,645 60,204
454 11,091
71,295
41
2,707
74,043
5,607
58,793
10,562
69,355
6,070
24,192
21,339
10,224
10,224
8,442
1,320
1,320
1,136
206
3,212
2,955
1,468
6,413
5,652
40
1,870
1,603
209
7,142
5,707
66
3,798
3,388
42
2,033
1,863
52,085
10,503
62,588
237
2,336
65,161
4,194
49
49
2,220
—
1,464
1,519
—
(2,194)
(1,361)
(3)
(3)
(85)
(671)
(4,553)
(5.244)
(625) (5,237)
$ (625) i 370
(2.951 )
$ 1,243
See notes to financial statements.
17
NOTES TO FINANCIAL STATEMENTS
JUNE 30. 1983
( 1 ) Summary of significant accounting policies —
Basis of accounting —
The financial statements of William Matsh Rice University (the
University) have been prepared in accordance with generally ac-
cepted accounting principles for colleges and universities. Accord-
ingly, the financial statements have been prepared on the accrual
basis of accounting except tor depreciation of educational plant
facilities, as explained below. Limitations and restrictions placed
on the use of available resources are recognized in the financial
statements through the use of fund accounting. Fund accounting is
a procedure by which resources are classified for accounting and
reporting purposes into separate funds in accordance with specified
objectives or activities. Funds having similar characteristics to-
gether with all related financial transactions have been combined
into fund groups in the accompanying financial statements.
The financial information shown tor 1982 in the accompanying
financial statements is included to provide a basis for comparison
with 1983 and presents summarized totals only.
Current funds —
The statement of current funds revenues, expenditures and other
changes is a statement of financial activities of current funds
related to the current reporting period. It does not purport to
present the net income or loss tor the period as would a statement ot
income or a statement of revenues and expenses.
The unrestricted current fund is used to account for those trans-
actions related to the University's operating budget as approved by
the board of governors and for certain resources which have been
designated for specific purposes by the University administration.
These latter items are presented under the internally designated
caption. With the exception of the internally designated fund
balance, it is the policy of the board of governors to transfer any net
increase In the unrestricted current fund balance for the year to
unrestricted funds functioning as endowment.
The restricted current fund is used to account tor funds expended
for current t)perations but restricted by donors or othct external
sources for specific purposes. Restricted current tund receipts are
reported as revenues when expended.
Current funds used to purchase equipment are accounted for as
expenditures ot the current funds. Equipment expenditures of the
unrestricted current fund are funded by a transfer from unrestricted
funds functioning as endowment (Note 7).
Endowment and similar funds —
Endowment funds are generally subject to the restrictions ot gift
instruments requiring that the principal be invested and only the
income be expended. Gains and losses arising from the disposition
of the investments are accounted for as changes in principal.
Endowment funds are either income restricted or income unre-
stricted as stipulated by the donor. Investment income from in-
come restricted endowments may be expended only tor the purpose
specified by the donor; unrestricted endowment income may be
expended tor any purpose approved by the hoard of governors.
The board of governors has designated certain restricted and
unrestricted funds to function as endowment funds. Restricted
funds functioning as endowment are comprised of (1) restricted
current gifts transferred to this fund by the board of governors and
(2) any excess of restticted Investment Income over current ex-
penditures. The principal of these funds may be expended, but only
In accordance with the original specifications of the donor. Invest-
ment income from these funds Is also subject to the same restric-
tions as the original gifts. The principal of unrestricted funds
functioning as endowment is spendable at the discretion of the
board of governors.
Generally, income from unrestricted endowment and similar
funds IS reported as revenue of the unrestricted current tund, and
income from restricted endowment and similar funds Is reported in
the fund to which It is restricted. However, investment income
from developed real estate and oil and gas properties equal to
amortization of the properties is retained In the endowment funds
tor the purpose ot asset recovery. In addition, 27-1/2 percent of the
net receipts from oil and gas royalties are retained in the income
unrestricted endowment tund after the related properties are fully
amortized.
Plant funds —
Plant funds consist of the total invested in the educational plant
together with unexpended gifts, grants, income and administra-
tively designated funds which are held for acquisition, replacement
or construction of physical properties. The educational plant Is
stated at cost for purchased assets and fair market value at the date
ot donation in the case of gifts. Auxiliary and educational service
facilities financed with advances from endowment funds are depre-
ciated over their estimated useful lives. Although no other educa-
tional plant assets are depreciated, it is the University's policy to
retire capitalized equipment at the rate of 6-2/3 percent per year.
Loan funds —
Loan funds include ( 1 ) gifts and grants which are limited by donors
to the purpose ot making loans to students or faculty, (2) the
National Direct Student Loan Program financed primarily by the
federal government and administered by the University and (3)
advances to the loan funds from unrestricted funds functioning as
endowment.
(2) Gifts and bequests —
It is the policy of the University to include gifts as revenues or
additions to the appropriate fund balances only when received.
Gifts and bequests without any designated obligatory use are re-
quired to be added to endowment, according to a legal interpreta-
tion of the University's charter. These gifts are recorded as
revenues of the unrestricted current fund and as mandatory trans-
fers to the endowment funds.
Pledges outstanding at June 30, 1983, which will be recorded as
revenues upon receipt ot the gifts, are as follows;
Current funds-
Unrestricted
Restricted
Total current funds
Loan fund
Plant and endowment funds
Total pledges
$ 11,000
86,000
97,000
150,000
7,706,000
$7,953,000
Rice Trust Inc., a corporation wholly owned by the University,
holds and administers assets, primarily marketable securities and
mortgage loans (market value of $15,779,000 at June iO. 1983)
and real estate (market value of $4,546,000 at April 1973, date of
most recent appraisal) tor various trusts. These assets are subject to
the lite Income Interests ot certain beneficiaries, several of whom
are minors. The amount and timing ot the ultimate distribution to
the University of Its remainder Interest is therefore not determin-
able, and the assets are not recorded in the accompanying financial
statements.
18
(3) Investments —
Investments ate recorded at cost at date ot acquisition or fair
market value at date of donation in the case of gifts, except for
donated interests in certain undeveloped real estate which were
recorded at nominal values and investments in wholly owned
corporations (Note 4). Taxes and maintenance on these donated
real estate interests (accumulated costs of approximately $847,000
at June 30, 1983) have been capitalized, subsequent to the date ot
donation.
Most income restricted endowment funds, restricted funds tunc-
tioninf^ as endowment and some unrestricted funds functioning as
endowment participate in a common investment pool which is
operated on a market value basis. Those income restricted funds
which by the terms of the gifts may not participate m such a pool
are maintained on a separate investment basis. Other endowment
funds are commingled for investment purposes in the general in-
vestment pool for unrestricted funds.
The University recorded approximately $25,188,000 in in\'est-
ment income from marketable securities in fiscal 1983. Income
from oil and gas properties recognized as endowment income in the
current funds was $7,326,000 m 1983. Realized gains in endow-
ment and similar funds in 1983 were $19,329,000 from markerable
securities (using the average-cost method) and $5,166,000 from
the sale of other investments.
(4) Investments in wholly owned corporations —
The financial statements include all assets, liabilities and fund
balances of the University except those of certain separately incor-
porated but related entities for which the University is fiscally
responsible. These corporations are included in the endowment
funds at underlying equity. In 1983, these corporations distributed
approximately $3,468,000 ti> the unrestricted endowment fund
and $69,000 to the unrestricted current fund.
(7) Provisions for plant improvements —
As a provision for plant improvements, a transfer equal to 10
percent of unrestricted endowment income has been made from
unrestricted current funds to unrestricted funds functioning as
endowment. The portion of the unrestricted funds functioning as
endowment fund balance that applies to this provision is
$4, 135,000 at June 30, 1983.
(8) Interest-bearing endowment fund advances —
Certain capital prt)jects, major maintenance projects for auxiliary
enterprises and student loans are funded with interest-bearing
advances horn unrestricted funds functioning as endowment. The
advances tor capital and major maintenance projects hear interest
at rates from 4 percent to 19 percent. The interest received on
student loans financed by these endowment fund advances is repaid
to the endowment funds.
(9) Commitments and contingencies —
There are several suits and claims pending against the University,
the effect ot which cannot be estimated at this time; however,
officials ot the University and legal counsel believe that the ulti-
mate liability, if any, will not be material to the University's
financial position.
The University was committed under contracts at June 30, 1 983 ,
for capital improvements of approximately $7,518,000 to be fi-
nanced primarily from funds functioning as endowment and gifts.
Commitments of $888,000 m the untestncted current fund and
$598,000 in the restricted current fund were outstanding at June
30, 1983.
(5) Deposits of collateral for securities loaned —
The University recei\'es collateral deposits for certain securities
temporarily loaned to brokers. As of June 30, 1983, the securities
on loan had aggregate market values of $5,967,000 ($2,686,000 at
cost) and the collateral deposits of $5,907,000 were invested in
commercial paper.
(6) Retirement plans —
Substantially all employees are eligible to participate in a defined
contribution retirement plan which is administered by an outside
agency. The University's contributions to the plan of $1,546,000
in 1983 were recorded as expenditures of the unrestricted current
fund. The contributions of the University and the plan partici-
pants, who are fully vested, are applied to individual annuities
issued to each participant.
The University also has a defined benefit retirement plan admin-
istered by the same outside agency covering participants who began
receiving retirement benefits prior to July 1, 1976, and certain
other employees. The University's contributions to this plan were
$295,000 in 1983, which includes amortization over a 10-year
period of prior service costs and certain guaranteed minimum
benefits. As of the most recent benefit information date, June 30,
1983, the actuarially computed value of vested benefits of
$1,461,000 was exceeded by the sum of the plan's assets and the
recorded liability by $65,000. The assumed rate of return used in
determining the actuarial present values of vested plan benefits was
7 percent.
19
ADMINISTRATION
SEPTEMBER I. J 983
BOARD OF GOVERNORS
SEPTEMBER I. 1983
Norman Hackerman
President
William E. Gordon
Provost and Vice-President
William W. Akers
Vice-President for
Administration
John L. Margrave
Vice-President tor
Advanced Studies and
Research
Ronald F. Stebhings
Dean ot Undergraduate
Affairs
J. David Heliums
Dean of the George R.
Brown School of Engineering
O. Jack Mitchell
Dean of the School ot
Architecture
G. King Walters
Dean ot the Wiess Scht)ol
of Natural Sciences
Larry James Livingston
Dean of the Shepherd
School of Music
Allen J. Matusow
Dean ot the School of
Humanities
Francis D. Tuggle
Dean ot the Jesse H. Jones
Graduate School ot
Administration
Joseph Cooper
Dean of the School ot
Social Sciences
Joseph Nalle
Treasurer-Secretary
D. D. Lovell
Assistant Secretary
Scott W. Wise
Comptroller
20
TRUSTEES
Charles W. Duncan, Jr.
Chairman of Rice
Board of Governors
President, Warren-King
Companies
Josephine E. Ahercrombie
Vice-chairman ot Rice
Board of Governors
Director, J. S. Abercromhie
Mineral Company
John L. Cox
Oil Operator
C. M. Hudspeth
Law Partner, Delange,
Hudspeth, Pitman
and Kat:
Edward W. Kelley, Jr.
Chairman
Investment Advisors,
Incorporated
Ralph S. O'Connor
President, Highland
Resources, Incorporated
Jack T. Trotter
Investments
TERM MEMBERS
Judy Ley Allen
Investments
J. Evans Attwell
Managing Partner,
Vinson and Elkins
James A. Elkins III
Assistant Vice President,
First City National Bank
James W. Glanville
Partner, hazard Freres & Co.
Catherine C. Hannah
PaulN. Howell
Chairman of the Board,
Howell Corporation
William F. Kieschnick
President and Chief
Executive Officer,
Atlantic Richfield
Company
David L. Rooke
Executive Vice-President,
Dow Chemical Company
ALL/MNJ GOVERNORS
David E. Farnsworth
President (retired),
Eddy Refining Company
Neal T. Lacey, Jr.
Partner
PLM Design
William M. McCardell
President (retired)
Exxon Minerals
Louis D. Spaw, Jr.
President, Spaw-Glass,
Incorporated
TRUSTEES EMERITI
Herbert Allen
Chairman of the Board
(retired), Cameron Iron
Works
E. D. Butcher
President (retired),
American Commercial
Lines, Incorporated
Harry J. Chavanne
Banker and Investor,
Chavanne Enterprises
Oveta Culp Hobby
Chairman ot the Executive
Committee
H.&C. Communications,
Incorporated
W. A. Kirkland
Chairman ot the Board
(retired), First City
National Bank
Theodore N . Law
Chairman of the Bo.ird,
Falcon Seaboard
Drilling Company
H. Malcolm Lovett
Partner, Baker and Botts
James U. Teague
Retired
GOVERNOR ADV/SORS
Richard A. Chapman
Senior Member, Technical
Staff, Texas Instruments,
Incorporated ^
John W. Cox
President and Director
(retired), General Package
Corporation and Automatic
Canteen Company ot
America
William S. Parish 111
President, W. S. Parish and
Company
James W. Hargrove
Financial Consultant
Gerald D. Hines
President, Gerald Hines
Interests
Carl lUig
Attorney
Mary E. Johnston
Board of Editors,
Fortune Magazine
Jack S. Josey
President
Lenoir M. Josey,
Incorporated
Howard B. Keck
Chairman of the Board
(retired), Superior Oil
Company
Bame P. Kerr
President, Pennzoil
Company
Wendel D. Ley
Investments
J. Hugh Liedtke
Chairman of the Board
Pennzoil Company
J. W. McLean
Chairman, Liberty National
Bank and Trust
James R. Meyers
Chief, Energy Division,
Office of Texas
Attorney General
Stanley C. Moore
Chairman Emeritus, Smith
International, Incorporated
S. 1. Morris
Partner, Morris/Aubry
Architects
Walter D. Murphy
Senior Vice President,
HCB Contractors
Ralph W. Noble
President, Milchem,
Incorporated
Haylett O'Neill, Jr.
Exxon (retired)
J. Howard Rambin
Chairman of the Board
(retired), Texaco
Incorporated
Taylor Ray
Rancher
Frank B. Ryan
Director ot Athletics,
Yale University
John D. Simpson
Chairman of the Board
(retired), Superior Dairies
Harry K. Smith
Chairman ot the Board,
Big Three Industries
Karl C. ten Brink
General Manager (retired),
Texaco, Incorporated
Talbott Wilson
Architect, Talbott
Wilson/ Associates
James O. Winston, Jr.
Former Director, Rowles,
Winston and Company
Benjamin N. Woodson
Chairman of the Board
(retired), American
General Companies
Helen S. Worden
I
miigjg
id
